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Ex-state employee seeks to withdraw guilty plea in bribery case

Updated January 16, 2018 at 2:36 PM;Posted January 16, 2018 at 1:03 PM

Martin Shain, left, a Seattle based energy consultant, and Joe Colello, right, the former Energy Department employee he is accused of bribing to help arrange the sale of state tax credits. (The Oregonian)

Joe Colello, the former state Energy Department employee who pleaded guilty last summer to taking nearly $300,000 in bribes, asked a judge to withdraw his plea, citing emails from state prosecutors that his attorneys claim could exonerate him.

Colello pleaded guilty June 21 to accepting bribes, theft and racketeering in connection with help he allegedly provided to a Seattle-based energy consultant, Martin Shain, in arranging the sale of state energy tax credits. The sales earned lucrative commissions for Shain, who then allegedly paid Colello.

In an emotional interview two days before entering his guilty plea, Colello told The Oregonian/OregonLive that he accepted the payments from Shain specifically for helping expedite the sale of the tax credits.

Colello replaced his lawyer in July. His new legal team, led by Salem attorney Mark Geiger, now says they've received "thousands and thousands of emails and discovery" from the prosecution since Colello entered his plea. The state, Geiger says, supplemented the discovery provided to Colello's original lawyer at least three times, including a batch provided in December with emails that Geiger claims "are exculpatory."

The defense now maintains Colello couldn't have "voluntarily and intelligently" entered the plea without all the facts in hand.

A response from the Department of Justice is due Friday, and the agency offered no comment. Geiger and Colello could not be reached for comment.

The alleged kickback scheme came to light after The Oregonian/OregonLive published the results of an investigation showing the state had improperly awarded nearly $12 million in state tax credits to a series of university solar projects based on forged documents. Shain was indicted on forgery charges. He has pleaded not guilty.

The FBI and the Oregon Department of Justice launched an investigation after the news report and discovered that Shain had also brokered the sale of tens of millions of dollars in state tax credits, helping a variety of public entities find buyers for the state incentives. In the process, they allege that Shain was bribing Colello, the state employee charged with matching buyers and seller of state tax credits, to steer tax credit buyers to Shain in order to quickly close the sales.

The Oregonian/Oregon Live published a detailed report in late November describing the alleged scheme that was based on thousands of pages of emails and other records obtained from the Department of Energy and a variety of public entities that had hired Shain to help find buyers for their tax credits.

In an affidavit filed with the court, Geiger said he only learned of the missing discovery, with the material he now claims is exculpatory, after reading The Oregonian/OregonLive report.

"I emailed the state, wondering how a reporter had more information about the case than I did. I was told by [Oregon prosecutor Elijah] Michalowski that "they didn't realize that they had that ... It was shortly after this communication that I received the December discovery, referenced above. In my 30-plus years of representing defendants in criminal cases, I have never received discovery of this magnitude post-plea."

Colello also maintains that he was coerced into making the plea. He contends he was told by the state that they would "go after" his wife if he didn't take the offer, and that his original attorney told him his wife would be prosecuted and his house and other assets seized. Geiger says Colello was threatened by the statement and pleaded guilty because of the threat.

Coello was scheduled to be sentenced Jan. 29. A hearing is now scheduled a week earlier to consider Colello's request to withdraw his plea.